After Wednesday’s news that Ladbrokes’ chief executive Richard Glynn was stepping down, it is another busy day for the bookies.
Sky has sold a controlling stake in its Sky Bet business to CVC Capital Partners for an initial £600m, valuing the whole business at £800m or a hefty 15 times earnings. Sky Bet was formed in 2001 and has benefited from its partnership with Sky Sports. Sky has agreed a long term brand agreement with Sky Bet.
Meanwhile online gambling business Betfair has jumped nearly 7% - up 91p to £14.59 - after it said it planned a £200m cash return to shareholders after a 51% rise in half year earnings to £73.9m.
Revenues increased by 26%, with mobile revenues more than doubling. The company benefited from growing its customer numbers by 50% to more than one million, the World Cup in Brazil and some favourable sports results.
As well as the cash return, it plans a 50% increase in its half year dividend to 9p a share and raised its medium term payout target to around 50% of earnings.
It also lifted its profit forecast for the year to £97m to £103m due to the first half performance “coupled with the momentum we take into the second half.” Previously analysts had expected around £96m.
Nick Batram at Peel Hunt said:
A strong first half came as no surprise, but ultimately EBITDA still came in ahead of expectations and the news of a £200m return of capital to shareholders came sooner than expected. There is little doubt the trading environment has helped, but equally management has succeeded in delivering an improved customer proposition and combined it with highly effective marketing. CVC’s acquisition of Sky Bet is also an interesting development and, combined, this leads us to put our [hold] recommendation and target price under review.
On Sky Bet, David Jennings at Davy said:
This deal will raise eyebrows across the gaming sector given the multiple being paid by CVC for what is a high quality online gaming business. At 15 times historic EBITDA (to end-June 2014), the multiple would be above that of many listed operators, although it should be noted that Sky Bet was already paying gaming taxes on its UK sports-betting business. That would suggest that the impact of the move to point of consumption tax will have a limited enough impact on future earnings. If the business was to grow EBITDA by 20% in the current year, the implied multiple would be 12 times. To put that in context, based on last night’s close, Betfair is trading on a current year EBITDA of 10.7 times.
